Treasury Regulations
The regulations constitute the IRS's official interpretation of the Internal Revenue Code and are issued in the form of Treasury Decisions (TD), which are published in the Federal register and eventually in the Internal Revenue Bulletin. Thirty days prior to a TD being published in final form it must be issued in proposed form allowing for public comment. These proposed regulations, unlike final regulations, do not have the force of law .
General Regulations: These regulations are issued under the general authority granted to the IRS to interpret the language of the Code usually under a specific directive of Congress and with specific congressional authority.
Legislative Regulations: With this type of regulation the IRS is directed by Congress to fulfill effectively a law-making function and to specify the substantive requirements of a tax provision.
In addition to proposed and final regulations, the IRS periodically issues "temporary regulations" in response to a congressional or judicial change in the tax law or its interpretation. Temporary regulations are effective immediately upon publication and are issued to provided you with immediate guidance concerning a new provision of the tax law. Temporary regulations carry the full force of law and should be treated as if final until it is superseded by a final regulation. One such temporary regulation that you may encounter is the one associated with Section 126, which explains how cost-share payments are to be treated for tax purposes.
Understanding a Regulation Citation
Each regulation is assigned a unique number by the Treasury which is broadly based on the code section being interpreted in that regulation.
For example: Reg. §1.262-1(b)(2)
The number to the left of the period indicates the type of issue that is addressed in the pronouncement. The most commonly encountered types of regulations include:
1. Income Tax
20. Estate Tax
25. Gift Tax
31. Employment Tax
301. Procedural Matters
The numbers to the immediate right of the period in the citation of a Regulation indicates the code section to which the regulation relates. The numbers and letters to to the right of the section number denote the Regulations number and smaller divisions of the pronouncement such as paragraphs and subparagraphs. The Regulation numbers typically are consecutive and follow the general order of the issues that are addressed in the corresponding code section. The regulation numbers, paragraphs and subparagraphs do not necessarily correspond to the subsection or other division designations of the underlying Code section. The numbering for a temporary regulation is similar to the numbering system for the final and proposed regulations; however, usually the reference to or citation of a temporary regulation will include a "T" designating the temporary nature of the regulation.